If you work in the construction industry as a self employed subcontractor it’s likely that you’ll have a fairly simple tax return to complete, and whilst your are taxed at source on all of your income there are also some expenses that you can claim against your income to limit your tax bill (or increase any tax refund) due.
Here are a few tips to use when preparing your return.
Before you can file your return you need to have an online account with HMRC. You can do that here, and you’ll need your UTR to complete the sign up process.
Once you complete the sign up you will be sent an activation code in the post (this is a security measure to make sure it’s genuinely you setting up an account. Apply the code and then you’ll be able to prepare your return.
You should receive a ‘CIS deduction statement’ from your contractor for all of the payments that they’ve made to you in a month. These are usually provided monthly, as that’s how often the contractor has to file their payments to HMRC, but you may find that you have more than 12 of these.
On your return you need to use the gross payment as your total income (the income figure before deductions). There is a specific box to add the CIS that was deducted too, so make sure you total up both figures.
Once you have these figures you should have the income side of things taken care of, but don’t forget to include any untaxed income that you might have received too. For example, any weekend private work that you did away from your normal subcontracting.
The level of expenses incur will depend on the trade that you’re in, as well as the type of work that you’re doing (site work will generally have less expenses than domestic). We’ve outlined below some of the expenses that you could look to offset against your income in your return.
Tools, Equipment, PPE & Materials
This is generally the most obvious type of expenses to claim. You can claim back the cost of tools, equipment and materials purchased to complete your work. You can also claim the cost of maintaining any tools or equipment that you own.
You have two options here.
You can look to claim the business portion of any fuel, road tax, vehicle repairs/maintenance costs, MOT and parking fees. Plus, if you have a lease vehicle you can claim the business portion of that too.
Or alternatively you can claim the for business mileage. Using this method you are allowed the first 10,000 miles at 45p and 25p for every mile over 10,000.
Home Office Costs
Do you do any work from home? Send invoices, speaking to contractors, advertising etc? If so, you can look to claim a portion the costs of running your home.
Generally, we find that it is quicker, easier & usually more beneficial to claim HMRC’s set allowances for working from home. You can find these amounts here https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
If you use your mobile phone for work calls, looking for work online, ordering materials etc. you can look to claim a proportion of the cost of your mobile phone costs.
Similarly to claiming for your actual motor costs, you’ll need to split out the private element of your phone usage and make sure you only claim for the business use.
Most self employed subcontractors are required to carry their own public liability insurance. As this is an expenses that you have to incur to complete your work, make sure you claim the annual premiums in your return.
What if I have very minimal expenses?
If your expenses are likely to be under £1,000 per year, save yourself the hassle of adding up your receipts and claim HMRC’s ‘trading allowance’. This allows you to claim a flat £1,000 against your income to cover all expenses in the year.
There’s more information on the trading allowance here https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#trade
And if all else fails, drop us a message and we'll do our best to help you get your filing complete.